Statewide property taxes would go down – $10 – but lower-spending districts would be allowed to raise property taxes by $92 millionJune 5, 2017: This story has been updated with reactions from Gov. Walker and legislators.

MacIver News Service | June 2, 2017

By M.D. Kittle and Ola Lisowski

[Madison, Wis…] Assembly Republicans are pushing a K-12 funding plan that cuts Gov. Scott Walker’s state education spending proposal by more than $100 million, raising property taxes slightly compared to the governor’s budget and cutting spending to private school choice to get there, according to legislative documents obtained by MacIver News Service.

At a press conference in Fitchburg, Walker said Monday he was concerned that the proposal could raise property taxes.

“Bottom line is, I don’t want to see property taxes go up.”

Walker’s education spending plan proposes a $648 million increase over the next biennium, which delighted the public education establishment.

The GOP Assembly plan still significantly increases K-12 spending, just not as much as Walker’s generous proposal. Some fiscal hawks in the Legislature have voiced concerns about the governor’s generosity to a public education system marked by widespread failure in Milwaukee and other areas of the state.

More so, the Assembly proposal frees up $100 million that could – and most likely will – find its way into other priorities, particularly the state’s troubled Department of Transportation.

The GOP Assembly plan cuts $23.7 million from Walker’s education spending blueprint in 2017-18, and $76.4 in 2018-19, according to a review by the nonpartisan Legislative Fiscal Bureau.

Assembly Republicans would add $20 million to Walker’s proposed increase in general school aids in 2017-18 and another $10 million in 2018-19. Overall, the plan would increase general aids nearly $103 million over the biennium – $20 million in the first year, $82.8 million in the second, compared to the base budget.

The plan also attempts to reward frugal school districts. It raises the annual low revenue adjustment at $9,800 per pupil beginning in 2018-19, up from $9,100 per pupil. Statewide, the increase would generate an extra $92.9 million in revenue limit authority used by school districts. Another memo authored by LFB describes potential changes by school district, according to the Assembly proposal.

State Rep. Mary Felzkowski, R-Irma, said the Assembly plan is simply reallocating aid to districts she says have been locked out by 25-year-old revenue limits. She pointed to GOP Assembly estimates that show 54 percent of districts would benefit more under the proposal compared to the governor’s K-12 plan.

The GOP proposal slices $35 million from Walker’s proposed $87 million increase in the school levy tax credit distribution in the first tax year, lowering the overall increase to $52 million. Compared to current budget base, the Assembly Republican plan would provide an additional $60 million above the $87 million increase. Levy credits are paid on a delayed basis, so the proposal would cut general fund expenditures by $35 million in 2018-19 and hike spending by $60 million in 2019-20, compared to Walker’s budget proposal.

Walker’s budget is more generous in per pupil aid. The Assembly plan would raise the categorical per pupil aid payment from $250 this budget year to $400 in 2017-18 and $600 the following fiscal year. Walker’s plan calls for $450 per pupil in the first year of the biennium and $654 in the second. It comes with a carrot and stick. Schools districts would have to certify they are following the employee health care provisions of Act 10.

A top Senate Republican rejected that alteration in an interview with the Wisconsin State Journal.

“We are sticking with the governor’s (proposed per-pupil increase). That is nonnegotiable,” Sen. Luther Olsen, R-Ripon, said. Olsen is a member on JFC as well as the chair of the Senate Committee on Education.

Walker’s per pupil spending increases, however, are tied to his plan to move public employees to a state health insurance plan, estimated to save at least $60 million. Assembly Republicans have all but rejected the self-insurance idea.

The GOP Assembly plan would cut per pupil aid by a total of $42.7 million in the first year of the biennium, and $48.1 million in the second year, compared to Walker’s plan. That is assuming maximum per pupil payments would be provided to all districts under both Walker’s plan and the Assembly proposal, according to the LFB memo.

Because the state’s school choice program is tied to the hip of the public education funding formula, school choice takes a cut under the Assembly plan.

Re-estimated enrollment in the statewide private school choice program is projected to increase by $6.17 million in 2017-18 and $9.52 million in 2018-19 compared to Walker’s proposal. But revenue limit adjustments and associated aid reductions and levy for the program are estimated to increase by nearly $6 million in the first year, and $11.47 million in the second, according to LFB. Parental Choice comes out with an increase in funding, just not nearly as much as the program would under Walker’s plan.

Property taxes would still decrease slightly, in the first year, under the Assembly budget proposal, but it would increase the property tax on the median-valued home by $10 and $11 over Walker’s budget proposal, according to LFB. The net levy would decrease under the Assembly proposal, by $10 to $2,842 in the first year of the biennium, holding flat in the second year.

The governor said he would be willing to make concessions in his budget as long as his priorities are maintained, including funding increases for K-12 education, fixing the troubled Department of Transportation, and holding the line on taxes.

JFC Co-Chair Sen. Alberta Darling, R-River Hills, also said she wouldn’t support the proposal. Walker has been promoting his budget’s proposed $649 million increase in state aids for months, and walking back from that increase will be tough, Darling said.

Despite their hesitations for the overall package, both Darling and Olsen said they were supportive of the concept of raising levy limits for low-spending districts.

“I give them credit for looking at how to get money into the lower-spending districts and I agree with the strategy but I mentioned to them, usually you need new money,” Darling said. “Taking money away from other districts is usually a big issue. That will be a very tough call for most in our (Senate) caucus.”

For his part. JFC Co-Chair Rep. John Nygren, R-Marinette, also expressed support for the concept, though he didn’t commit to a position on the proposal, calling it a “work in progress.”

“I think the concept of it is something we generally support – to put more of our resources back toward schools that have actually been held back over the years.”

MI President Brett Healy

Brett Healy is the President of the John K. MacIver Institute for Public Policy, a Wisconsin-based think tank that promotes free markets, individual freedom, personal responsibility and limited government.